China is planning to invest billions in solar energy. The country is already among the leading exporters of the technology.

The desert begins just outside the window. The air shimmers with heat; the endless dunes of the Gobi desert stretch out into the distance. Caravans once travelled the Silk Road here, tired, sweat-soaked traders longing to reach the Dunhuang oasis. It's quiet in Ren Tao's office, so quiet that you can hear his cigarette sizzle. On his desk is a picture - the green, rolling hills of southern China. People always adorn their places with what they yearn for. In the tropics they nail snowy landscapes to the wall, in Europe palm-studded beaches, and in the desert images of lush greenery.

Something about Ren Tao is reminiscent of the last watchman on the farthest-flung bastion of the Great Wall. He has the calm voice of a man who has all the time in the world; his movements are unhurried like those of a recently woken cat. Except that in contrast to the watchman, Ren is not on the lookout for marauders on horseback. He is waiting for the photovoltaic cells of his power plant to fill with solar energy. The sun is very powerful here, it tans people's skin with surprising speed; the only places in China where better solar energy is available are the highlands of Tibet and Qinghai. »We«, says Ren and stretches, »were the first. The pilot project.« The Dunhuang solar power plant, of which he is the manager, began operating on 30 September 2009. It was China's first solar power plant. And that's only the first of several paradoxes of the Chinese solar market. China's manufacturers of solar modules supply the whole world. They account for almost half of all global sales and approximately 60% of profits made in the industry. The top ten fastest growing solar companies include eight from China and Taiwan, but not a single one from Germany. And a solar giant like that is so late to launch its first, small 20 MW power plant in Dunhuang, Gansu province?

»Solar energy is far more expensive than water, wind or coal-fired power plants, the necessary investment is high«, says Ren. »That's why we took our time.« But pretty much every large river, he explains, has meanwhile been harnessed by hydroelectric dams, forcing the government to develop other forms of energy. And it is doing so at breathtaking speed. China is the world's largest CO2 polluter. For a long time, the country refused to accept legally binding limits on its emissions, pointing to its status as a developing country. This Monday however, the head of the Chinese delegation to the climate conference in Durban for the first time declared that Beijing was prepared to agree to a legally binding treaty covering all countries. But only if five conditions were met - and probably not before 2020. First, the EU and other countries would have to agree to a legally binding treaty according to the Kyoto Protocol. Developed countries would have to provide financial support to poorer countries to help them meet their climate responsibilities. And the ability of each country to do its share to combat global warming would have to be taken into account.

At the climate conference in Copenhagen, Beijing had already promised that by 2012 it would reduce its emissions per unit of GDP by 40 to 45% compared to 2005. German consulting company Ecofys recently examined this promise and concluded that China may even exceed those targets. The country is nonetheless creating more pollution than planned, according to Ecofys, because its economy is growing faster than expected. Currently, China still obtains four fifths of its energy from coal-fired power plants. In some places, pollution has reached life-threatening levels; alongside illegal land occupations it is seen as one of the main reasons for countless protests across the country. Usually, industrialised countries first become rich and then green; China must become green before most Chinese have become rich. The country aims to increase the proportion of non-fossil energy sources in its energy mix to 11.4% by 2015, and 15% by 2020.

Last year it was 9.5%. Non-fossil energy sources include water, renewable energies and nuclear power. Environmental protection activists are now waiting to see whether the proportion of nuclear energy will be reduced in the wake of the Fukushima accident, and the proportion of renewable energies increased. Solar power at least is growing faster than intended. »In 2007, the plan was to install 1.8 gigawatts (18,000 megawatts) of solar capacity by 2007. The new plan already stipulates between 5 and 10 gigawatts for 2015«, says Yan Li, climate campaigner at Greenpeace China. Developments in wind power have exceeded the government's targets several times already, she continues, »and we have high hopes that the same will happen with solar power«. This year, country-wide capacity is to reach 3 gigawatts. Solar parks are being opened across the country, the largest is currently under construction in Golmud, Qinghai. Qinghai, says Ren and looks a little unhappy.

He doesn't like being reminded of the competition, and anyway: his own company, he says, has big plans. Ren leads us to a map showing the current status of the Dunhuang solar park, a small rectangle in a corner dwarfed by a gigantic field. His power plant is expected to add 95 megawatts this year. »And then«, says Ren, his eyes widening: 1,000 megawatts by 2015, 5,000 by 2020! And that, he explains, is only conventional solar power; in addition there are plans to generate energy from steam gained with the help of large mirrors, water and solar energy. »Theoretically«, says Ren, »we could pave over the entire Gobi desert with solar power plants.« Space and sun, these are things China has in abundance. »The only problem is: how do we integrate this energy into the national electricity network?« The solar industry is faced with a dilemma: where the conditions for solar energy are best, namely in the west of the country, is where the fewest people live. »There are only two state companies who are allowed to build the electricity network«, says Ren. And they are struggling to keep up with installing power lines. Solar energy is only one aspect; large-scale investments are also being made in wind energy in Dunhuang.

»The most important thing is to have a stable feed-in tariff«, says Ren. China's first solar power plant is tasked with experimenting with this tariff, that is, with determining how high state subsidies will have to be. Solar power is still twice as expensive as wind power and four times as expensive as electricity from coal-fired plants. A national feed-in tariff has existed since last August and is currently set at 1.15 Yuan (approximately 12 eurocents); next year it is to be reduced to 1 Yuan. It was mainly the ambitious local governments who pressed for this move - because they have big plans. Driving through Dunhuang, it feels as if someone had simply pulled the plug on this often overheated country. 180,000 people live here; building facades and streetlamps are adorned with tian fei, the elegant angels frequently seen in Buddhist grottoes. We want to interview the local government. Journalists making such requests often have to send faxes weeks in advance. Zhao Tingqian, head of the energy department, simply says: »I'm here. Just drop by.«

There's not much for Zhao to present yet; so far, the future lives only between the covers of cardboard folders. »In June, Dunhuang was declared the second model city for the application of solar power«, he says. According to the 12th five-year plan there will soon be a hundred such cities; many in the west have ambitious plans, according to Zhao, but, he announces solemnly, »only we have the decree from the State Council«. Competition among the cities is great, and of course, says Zhao, they all want to be the first, the biggest and the best. Want to expand their solar power plants, but particularly to encourage private consumers to use solar power. The government reimburses those who install photovoltaic cells on their roofs or in their backyards for half the investment costs. The electricity cannot be fed into the electricity network, it is to be used privately, as are the solar-powered water heaters.

By 2013, says Zhao, Dunhuang hopes to produce more energy than it consumes. All traffic lights, streetlights, even the small lamps that destroy insects are to be operated by solar power. According to these plans, solar-powered electric cars with large photovoltaic cells on their roofs will travel Dunhuang's streets, and there will be special solar-powered filling stations. »We live well here on tourism, but we still want to develop. However, we don't have enough water to develop our agriculture. And many industries are dirty and use a lot of water.« Once they were poor and underdeveloped, now this is turning to their advantage. A place that has no industry is not polluted. Renewable energy is where the future lies for Dunhuang, for Western China, says Zhao. »We transform waste into something valuable. The desert wind used to cause terrible destruction, now we take advantage of it. The sun used to bother us. Now we benefit from it.« Zhao leans back with a satisfied smile: »The man in the moon is good to us.«

Baoding, Hebei province, almost 2,000 kilometres from Dunhuang in the east of the country, where China's heart beats at least twice as fast. This is where the solar cells come from that make up Ren Tao's power plant. Basketball hoops and a stage enliven the premises of Yingli, China's second-largest solar manufacturer. Those who feel inspired can offer their colleagues a little show after the day's work is done. Photographs on the factory walls show employees doing martial arts exercises and disaster training: Yingli participates in the People's Militia. Green energy and People's Militia, the two obviously mix easily in Yingli's ideology. Leon Zhao, director of the sales department, is a smartly turned out man who speaks perfect English and can name all the teams in the German football league without hesitation. No wonder - Germany is the company's main market. Last year it shipped 55% of its production to the Federal Republic, this year it will be up to 50%.

There is no Chinese manufacturer who could not recite from memory the details of Germany's feed-in tariff, which has made the country the world's largest solar market. And it is mainly the Chinese who have benefited. That wasn't really the plan; what the German government intended was to support its native industry. But because Chinese manufacturers are up to 30% cheaper, many German consumers buy Chinese, a fact of which German manufacturers complain bitterly. This year however, the Chinese industry is struggling itself; Yingli's share price has been down for weeks. And it's all because of Italy. »Italy copied Germany's policies, but its feed-in tariff was even better.« Also, the sun shines twice as often there, says Zhao. »Everyone expected an excellent year and produced like mad.« But then, the goods were already piled into their shipping containers, the Italian government realised the extent of its financial problems. It halted projects, cut subsidies. And the Chinese were stuck with their overcapacity. »This year alone, prices have fallen by 50%«, according to Zhao.

»For many, that will spell the end.« Several of China's over 1,000 solar companies have already had to close down. But Zhao sees an opportunity in this price war. Only if solar energy becomes even cheaper, he believes, will it be able to compete with other sources of renewable energy. »The governments won't pay forever. We have to be ready for that.« Yingli, says Zhao, is among the best when it comes to production costs, due to its integrated production methods. Almost all manufacturing stages are combined at Yingli: the company's workers melt, press and cut the silicon to then apply it to solar cells. But there's another secret to the company's success, says Zhao. They have never turned away from Germany, even when better deals beckoned elsewhere. »The German market is stable. And at 14% we have the best share of it this year.« But how do they manage these highly competitive prices that the Germans cannot match? Mainly through their low production costs, says Zhao. The factory now needs so few employees, he explains, that personnel costs are negligible.

German and American manufacturers on the other hand suspect that the banks are giving Chinese manufacturers large-scale loans at preferential prices. The United States International Trade Commission has recently agreed to an investigation into whether the trade practices of Chinese manufacturers are skewing the competition. The threat of punitive tariffs has been raised. »Sheer protectionism«, fume the Chinese. What particularly angers the Germans is that they have few chances on the Chinese market. It is very rare for foreign companies to receive contracts here. Zhao waves these claims away with a smile. He is already eyeing up new targets. Roofs. »That's where the future lies. All over the world. We need to get closer to consumers. We need to get on their roofs.« That's why Yingli sponsored the Football World Cup, he explains, and why they are now sponsoring FC Bayern. They want to create a brand that is known across Germany. Their second target is rather closer: China. The best way to promote industry is to create a domestic market, says Zhao. »Right now, Germany is the greenest country in the world. I hope one day it will be China.«